Objective Assessment Retake Exam

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16 WGU C214 Financial Management Objective Assessment Retake Exam Questions and Answers (Verified Answers)

1.Which will be larger: accrual taxes payable or accounting income tax ex-

pense:

ANS Accounting tax expense will be higher; actual taxes based on IRS rules will be lower 2.Which financial ratios measure "efficiency" ANS Asset turnover and Fixed Asset turnover 3.Which ratio is the best measure of a firm's ability to pay bills ANS Quick Ratio 4.Which decision requires using subjective estimates ANS Economic life of a new asset 1 / 3

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16 5.What is the yield to maturity on a bond ANS The return earned from the purchase date to maturity 6.If a firm buys a 30-day CD, where is it carried on the balance sheet ANS Cash and ST in current assets 7.How does a "prudent investor" select investments ANS Seeks the highest return for "reasonable" amount of risk 8.What is the difference between WACC and CAPM's required return ANS CAPM includes only equity required return; WACC includes debt and equity 9.What do points on the Efficient Frontier measure ANS The maximum return for a given level of risk; maximum Return-to- risk ratio 10.What is Beta ANS Measure of volatility of a stock's risk relative to the market 11.Why are accurate forecasts important ANS Plan for resources to support sales 12.Which leverage measure shows the impact of EBIT changes on pre- 2 / 3

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16 tax profit (EBT) ANS Financial leverage 13.Which ratios are used in working capital management ANS Cash ratio, Current ratio - ratios containing current assets and/or current liabilities 14.Which ratio is used for valuing a private company ANS Price-to-earnings (PE) ratio 15.What are the 4 costs associated with holding inventory ANS Product, storage, holding, and opportunity 16.What risk is eliminated by a diversified portfolio ANS Idiosyncratic risk - risk affecting a single firm 17.What is the "secondary" market ANS Investors trading securities among them- selves after initial issuance of securities 18.What are impacts of outsourcing ANS Fewer jobs and lower priced products

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